Tags: China | Financial Markets | Media Bias | catl | chinese | musk | nyt

GM's Move to Electric a Hat Tip to China, Not US Markets

gm metal fabricating plant in marion indiana

Marion, Indiana, c. March, 2019: General Motors Logo and Signage with American flag at the Metal Fabricating Division. GM opened this plant in 1956. (Jonathan Weiss/Dreamstime.com)

By Wednesday, 10 February 2021 06:23 AM Current | Bio | Archive

General Motors’ announcement that it will stop selling cars and trucks with internal combustion engines by 2035 is being described by a New York Times (NYT) editorial as "a reminder of the power of free market forces."

It’s touching to see the Times editorial writers suddenly discovering the virtues of free markets. But it’s also somewhat comical, because the GM elimination of gas-powered vehicles is less about responding to free choices of individual customers than it is about following orders from the government in mainland China, which is not a free country.

The New York Times’ own news coverage has explained that by embracing electric cars, General Motors is bowing to the policy set by the Chinese Communist government.

A Times news article by the paper’s Shanghai bureau chief, Keith Bradsher, reported, "Just three months ago, Chinese policymakers ordered that most vehicles sold in China must be electric by 2035."

The Times quoted a professor at the Cheung Kong Graduate School of Business in Beijing, Liu Jing, who said that in the car industry, "the most important thing is what the government does."

Reported the Times, "China’s drive for dominance in electric cars began in 2007. That was when Wen Jiabao, then China’s premier, unexpectedly selected a former Audi engineer, Wan Gang, to become the minister of science and technology. Mr. Wan, who had also served as president and as director of the Center of Automotive Engineering at Tongji University in Shanghai, was a passionate advocate of electric cars. He had strong support from China’s military and intelligence community, which had long seen the country’s oil imports as a strategic vulnerability."

Nor is the government role limited to China. The move also came amid a new U.S. presidential administration that announced plans to convert the entire federal government vehicle fleet to electric power. Even the continued existence of General Motors in its present form is less a free market phenomenon than the residue of a government takeover or rescue that took place at the end of the George W. Bush administration and beginning of the Obama administration. "Bush approves $17.4 billion auto bailout" was one headline the Times put over the story in December 2008.

If GM’s plans to transition to electric cars don’t work out, you can bet the automaker will be back in Washington looking for more money from American taxpayers.

GM is not the only U.S. automaker reliant on Chinese sales. "We are currently the leader in the Chinese market," Tesla CEO Elon Musk said in a call about Tesla’s 2020 earnings.

Nikkei reports that of nearly half a million Tesla cars sold in 2020, about 135,400 were sold in China. In February 2020, Tesla entered a battery supply agreement with China-based Contemporary Amperex Technology Co., or CATL.

Disclosure documents for a September 2020 $1.5 billion bond offering to help finance CATL tell some of the story: "The change of governmental policy on the new energy vehicle industry could affect our business."

In an October 2020 speech, the chairman of CATL, Robin Zeng, sounded like an apparatchik as much as the billionaire businessman that he is. "

At the 75th session of the United Nation General Assembly, President Xi Jinping delivered an important speech, reiterating the Chinese government’s solemn commitment to the world: China aims to peak carbon emissions before 2030 and achieve carbon neutrality before 2060," Zeng said.

"Not long ago, the State Council executive meeting adopted the 'New Energy Vehicle Industry Development Plan (2021-2035).' As an essential program for the next 15 years to lead the industry's development, the Plan has further clarified the industrial development goals and safeguard measures."

The State Council is essentially the Chinese cabinet.

There may be sound environmental or economic reasons for consumers or governments to prefer cars that run on power generated at electric power plants rather than by gasoline-powered engines.

And perhaps someday, even without a government push, consumers in great numbers will decide that they’d rather drive electric cars than gas-powered ones, just as some consumers choose electric stoves or clothes-dryers or lawnmowers over gas-powered ones.

Some of this is happening already as American buyers voluntarily opt to trade in their Mercedes and Audis for Teslas, with minimal tax subsidies.

Yet when a Chinese cabinet decision sets the timeline for an American automaker’s decision to make it impossible to buy a Cadillac or a Buick with an engine that rumbles or roars, it’s hard to see it really as "a reminder of the power of free market forces."

Anyone wishing to mount a serious challenge to the State Council’s electric car plan might find themselves like Hong Kong publisher Jimmy Lai or democracy advocate Martin Lee— under arrest.

That’s not freedom at all.

It is, instead, a reminder of the far-reaching influence of the Communist Chinese government.

Ira Stoll is author of "JFK, Conservative," and "Samuel Adams: A Life." Read Ira Stoll's Reports — More Here.

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Ira-Stoll
Yet when a Chinese cabinet decision sets the timeline for an American automaker’s decision to make it impossible to buy a Cadillac or a Buick with an engine that rumbles or roars, it’s hard to see it really as "a reminder of the power of free market forces."
catl, chinese, musk, nyt, tesla
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2021-23-10
Wednesday, 10 February 2021 06:23 AM
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